The Herfindahl index and the concentration ratio fail to give a complete picture of an economy's competitiveness because:
A) they measure each firm's share of sales rather than each firm's share of profits.
B) many corporations are conglomerates, spanning a variety of different industries.
C) they don't account for mergers within an industry.
D) they are based on market share, not market size.

Question

Quizplus · Accepted Answer

The Herfindahl index and concentration ratio may not fully capture competitiveness because conglomerates operate across multiple industries, making it difficult to assess their impact on competition within a single industry.

The Herfindahl Index and the Concentration Ratio Fail to Give